How the Renewable Heat Incentive Works

The Renewable Heat Incentive is a sister scheme to the Feed In Tariff for electricity and should be introduced by October 2012. It provides financial assistance to encourage homeowners, communities and businesses to switch from fossil fuels to renewable energy sources such as biomass for their heating needs.

By installing a renewable heating system you will be paid a set amount each year to encourage you to reduce carbon emissions. Rather than measure the heat generated, an estimate of the heat energy needed to warm both the house and hot water will be used to work out payments depending on various factors such as the age and size of house and the renewable technology employed.

Technologies that are eligible for the scheme include solar thermal, water and ground source heat pumps and biomass boilers. Any system installed on or after July 15, 2009 will be eligible for the scheme. In addition to receiving payments for heat generated, you will also save money by not using gas or oil.

The tariffs will last for 20 years. This is long enough to cover installation costs.

As of July 2011, up to 25,000 installations will be supported by a new ‘RHI Premium Payment’ to help people cover the purchase price of their renewable heating systems. The RHI Premium Payment will cover technologies across all of Great Britain. Different heating systems will offer different payments.

Those taking up the premium will be eligible for a RHI tariff from October 2012, as will anyone else who has had eligible equipment installed from July 15, 2009. The amount for solar thermal for example is £300/unit.

There will be clear eligibility criteria in order to qualify for a Premium Payment, including:

  • A well insulated home based on its energy performance certificate
  • Agreeing to give feedback on how the equipment performs

The Government is expected to publish details of the RHI Premium Payment and how this will apply in May.

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